Got Oil? December 25, 2008
Posted by Aziz in analysis.Tags: NYMEX, Oil, OPEC
trackback
I walked into the office thinking about the post i’m working on which is related to oil, so I open the daily monitor to look at the futures and there goes NYMEX Crude trading at $35.35 (-9.31%) from yesterday’s trading. Oil has lost 78% of it’s july 2008 highs.
- OPEC cuts oil production and will cut it even further(in my opinion) but that didn’t help.
- We still can’t see the light at the end of the tunnel (economy wise) which means nothing will increase the demand for oil.
NYMEX Crude is trading in USA dollar.
Maybe, the planet is uttering a vote of no-confidence in the USA dollar regime.
When that loss of confidence will reach its climax, the disequilibria brought about the USA dollar regime will be reversed and a sane monetary system will arise.
That’s the programme in Muscat on Monday and Tuesday.
GCC Summit in Oman Will Finalise Unified Monetary Regime Plan
T Ramavarman
23 December 2008
http://www.khaleejtimes.com/DisplayArticleNew.asp?col=§ion=theuae&xfile=data/theuae/2008/December/theuae_December438.xml
SNIP
ABU DHABI – A summit of the six-member Gulf Cooperation Council (GCC) countries, to be held in Oman on December 29-30, is expected to announce a final roadmap for the introduction of a unified monetary regime, common currency and a new unified GCC Monetary Authority.
The dollar is toast! No value!
Any oil dollar-price has no value whatsoever.
Why do you expect the price of oil to rise in dollar?
In Al-Khaliji, the GCC single currency, the price of oil will rise.
How Deflation Creates Hyperinflation
By Eric deCarbonnel
December 15th, 2008
http://dollardaze.org/blog/?post_id=00546
SNIP
Despite the glacial rate money is moving through the economy, the dollar has started to fall again, and gold has begun to rally. As this continues, investors will begin to questions the safety of treasuries, and sell them off. The money coming out of treasuries will add fuel to gold’s rise and the dollar’s fall. Once the dollar hits new lows and gold breaks convincingly over $1000, Investors expecting deflation will begin to panic, and a flood of money will come out of treasuries. It is then that hyperinflation will begin in earnest.
Well with the corelation between KSE and Oil prices stock market will not see a recovery anytime soon. So Aziz do you think ‘09 got any chance of good things happening? Especially after the first day of trading in the Gov. Fund there were too much selling on blue chips and if it kept happening the fund will not be effective and it going to be a matter of time for the market to plummit again.
OZM: oil and kse correlation is actually my next post. and no i don’t see great things happening .. maybe ok things.
U.S. debt approaches insolvency; Chinese currency reserves at risk
by Maurizio d’Orlando
12/19/2008 16:54
ASIA – UNITED STATES
http://www.asianews.it/index.php?l=en&art=14054
SNIP
In a few months, America’s public debt has grown to more than 100% of GDP. Fear of a valuation crisis for the dollar, with tremendous consequences for Asian countries, major exporters to the United States.
This is my maiden comment to this wonderful and informative site. My observations regarding the Got Oil? posting are as follows:
1. Crude overshot on the upside (WTI @ $147) and is now probably overshooting on the downside. This is the nature of speculative bubbles bursting (same for Kuwaiti stocks, unfortunately)
2. Support at $ 50-55 did not hold. If current mid-30’s do not hold, then prices could decline to $20-25
3. Recent strengthening of the USD$ is a negative for commodity prices as there is an inverse relationship between them. If USD$ breaks down, then oil and other commodities may rise.
4. Longer term, there is a definite demand-supply imbalance favouring higher prices. The longer oil stays depressed= more oil projects being canceled=less new supply coming to market=higher prices. Shorter term, the news is unlikely to be good, baring any political developments (e.g. wars, coups, etc.) OPEC’s actions are helpful longer term, but the market knows that compliance is always suspect during difficult times.
5. Interestingly, gold bullion prices may be a good indicator for oil and other commodities. Gold’s high above $1,000 in March 2008 was 4 months before the peak in commodities (July 2008). Gold corrected first and is now attempting to form a base (Oct-Dec 2008) while oil is still declining. Again in June 2006, gold achieved a major low about eight months ahead of other commodities. In light of this, maybe gold has some forecasting value in acting as a leading indicator for turns in oil/commodities?